The H2Accelerate collaboration has today published the third and final paper in its recent policy series. In this paper, the collaboration proposes a pan-European mechanism to provide long-term total cost of ownership certainty for hydrogen-powered heavy-duty vehicles.

Policies currently implemented in leading Member State markets are creating the conditions for hydrogen trucks to achieve a total cost of ownership (TCO) which is competitive with diesel trucks. However, certain policies, such as RED III credit mechanisms, provide cost advantages that can vary over time. This can introduce uncertainty for fleet operators considering long-term investments in zero-emission vehicles.

The H2Accelerate collaboration is proposing a TCO Parity Certainty Mechanism – a temporary, competitively awarded operational support mechanism designed to guarantee TCO parity between hydrogen and diesel heavy-duty vehicles and unlock scaled demand for hydrogen trucking.

Policy support is beginning to deliver TCO parity, but long-term certainty is needed

European Member States have implemented a range of policies to improve the commercial case for zero-emission trucks. These include capital grants, road toll exemptions and reductions, renewable fuel credit mechanisms and, in future, ETS II. In leading markets, these policies are reaching a tipping point where hydrogen trucks can be competitive with diesel alternatives. In Germany, for example, the THG Quota provides valuable credits for renewable hydrogen used in transport, supporting lower hydrogen prices at the pump under high-volume offtake contracts and enabling TCO to reach levels competitive with diesel equivalents. When combined with other measures in place in Germany, the THG Quota can support a competitive business case for hydrogen-powered trucks.

The future value of market-based measures, such as renewable fuel credits, is unknown and varies through time. Reliance on these variable mechanisms alone can therefore result in a challenging business case which may delay vehicle procurement and create investment uncertainty. When used alongside additional measures however, these mechanisms are a powerful tool which can materially improve the TCO of hydrogen trucks.

Charles Cambournac, Managing Director at Hyundai Hydrogen Mobility Germany said:

“The policies being implemented in leading European markets are demonstrating that hydrogen trucks can reach a competitive TCO with diesel. The challenge for fleet operators is having confidence that this business case will remain in place over the lifetime of the vehicle.

Providing long-term certainty around TCO parity would give customers greater confidence to commit to hydrogen trucking at scale. That demand is also critical for giving vehicle manufacturers, hydrogen suppliers and refuelling station operators the certainty needed to make their own investments.”

A European mechanism is proposed to guarantee TCO parity while making use of existing policy support

The proposed TCO Parity Certainty Mechanism would work alongside existing European and Member State policies rather than replacing them. Support under the mechanism would cover the residual TCO gap after accounting for measures already in place, including national grants, toll exemptions, RED III credits, ETS II impacts and other relevant incentives. In markets where existing policies already achieve TCO parity, little or no additional support would be required. Instead, the mechanism would provide a guarantee against changes in policy or the value of market-based support mechanisms.

H2Accelerate proposes that support should be awarded through competitive tenders, incentivising applicants to develop the most cost-effective business cases. Operational support could be provided through different structures, including a payment linked to hydrogen consumption or kilometres travelled, or a variable contract for difference mechanism.

Linking support to operation would also ensure that public funding rewards actual vehicle and infrastructure utilisation and is linked to delivered emissions reductions, while competitive bidding would minimise the level of support required to achieve TCO parity.

Key principles for a TCO Parity Certainty Mechanism

H2Accelerate members have set out several key principles for the design of a successful TCO Parity Certainty Mechanism, including:

• Focus on zero-emission heavy-duty trucks of 30 tonnes and above (Class N3);
• Award support through competitive bidding to achieve the best possible value for public funding;
• Provide certainty on TCO parity with diesel over the economic lifetime of a vehicle;
• Reward operation and utilisation, rather than vehicle or infrastructure deployment alone;
• Take account of existing policy support to ensure that only the residual TCO gap is funded;
• Support cross-border operation and the development of key European transport corridors; and
• Operate through regular funding rounds, with the level of support reducing as the hydrogen mobility market matures;

Hannah Bryson-Jones, Spokesperson for the H2Accelerate collaboration, said:

“Across this series of policy papers, we have set out the measures that can create a competitive business case for hydrogen trucking, and how targeted capital funding can bring trucks and refuelling infrastructure onto the market together. The final piece is providing the long-term certainty needed for customers to invest at scale.

A TCO Parity Certainty Mechanism would build on policies already being implemented by Member States, covering only the residual gap with diesel and providing protection against future changes in policy or market-based incentive values. If designed correctly, this mechanism can unlock customer demand in the near term, support investment across the hydrogen value chain and reduce the level of public support required as the market scales.”

The H2Accelerate collaboration proposes that the mechanism could be implemented as part of the EU’s next Multiannual Financial Framework for 2028–2034. The mechanism would be temporary, with the level of support reducing as the hydrogen mobility market matures and the underlying TCO of hydrogen trucks becomes increasingly competitive with diesel.

The full paper can be downloaded from the H2Accelerate website here.

About H2Accelerate

H2Accelerate is a collaboration between Daimler Truck, Linde, Hyundai Hydrogen Mobility, TEAL Mobility, TotalEnergies and Volvo Group, working together to accelerate the deployment of hydrogen for long-haul trucking in Europe.